Riga Conference: Russian modernisation

We’re back after a caffeine break for the late morning session on Russian modernization: Is society ready and will it bring Russia closer to the West? On the panel are:
Mr. Andris Teikmanis, State Secretary, Ministry of Foreign Affairs of Latvia
Prof. Dr. Horst Teltschik, former Foreign Policy Adviser to the German Chancellor Helmut Kohl
Dr. James Sherr, Senior Fellow, Russia and Eurasia Program at the Royal Institute of International Affairs
Amb. Kurt Volker, Managing Director, Center for Transatlantic Relations, J.Hopkins School of Advanced International Studies, Washington DC
Mr. Arkady Moshes, Programme Director, Finland Institute of International Affairs.

Teikmanis begins addressing the question saying Russian modernisation looks promising. It is necessary for dealing with ethnic groups and economic classification. And in a society which has already adopted social media and in an era of global media access, it is necessary to be able to function within the world economy. Modernisation guarantees free and fair justice, for economic and property rights within the business community. It also means political modernisation and can boost diversification of political opinion and policy development. And Russia is not alone in this political process. Latvia has signed an agreement for bilaterial cooperation with Russia, and there are other agreements in place for modernisation. But it shouldn’t just be a matter of Russia being in Europe but more Europeans in Russia – then Russia will be able to live like the West.

Teltschik takes the stage. He begins by saying that sure, Russia needs modernisation. The main problem that Russia faces is perception of a functioning Russian political and economic system. Russia has been aware of the benefits of the free market economy for 30 years but does not know how to implement it. How do you establish small and middle sized businesses in an economy that is over-bureaucratised? He notes that among the Russian community, preaching about the free market economy is not welcome. After Perestroika, it was said that it is up to the Russian society to bring about freedom, not the political elite. This happened. The same needs to happen for political and economic reforms. But the problem is that there are no clear institutions to bring about change. Telschik is optimistic about what can happen in Russia, and says we can watch the development of a kind of middle class – now about 20-30% of the Russian middle class, and by 2020 about 40% of the Russian poulation. This will change the country. We need patience – can’t change a country quickly that has never had a democracy.

Sherr considers the question of a middle class driving Russian modernisation. Russia’s imperative is not modernisation it is lawlessness. When Putin came to power 11 years ago, the political rule was threatened by private interests. Putin has managed to integrate political power with private interests in a kleptocracy. As such in this system wealth is no protection, property rights are meaningless. Russia is smothered by complex and contradictory regulations whose main purpose is to ensure that without adequate protection, you can do nothing. Those who have power in this system make up the law as they go along. All of this is antithetical to genuine entrepreneurship, competition and has driven Russia’s most talented and decent people abroad. This whole system corrupts. In these conditions strategies of modernisation are strategies of denial. Sherr says the focus should be on energy industries. 70% of Russia’s gas resources go on the internal market, and much is wasted. Russia’s dependence on energy markets also are a concern. Russia needs to build its relations through diplomacy (some of which is good), but also on intelligence (most of which is best). This power and intelligence oriented economy is an impediment to international relationships, and ultimately modernisation.

Volker agrees with Sherr and starts with a joke: how many psychiatrists does it take to change a light bulb. Answer: just one, but the light bulb has to want to be changed. You can’t modernise a country when there are so many impediments to social progress. Russia wants to play a constructive role in the world community. Volker says that the atmosphere in the relationship between US and Russia is far better than it has been for years. This has allowed dialogue on issues such as Libya and Iran. But there have not been any true results of relationships on economic issues. Indeed most of the discussions and resolutions that have taken place – and have been considered successful – are in Russia’s interests. Don’t put too much faith in change to the ruling system. But we shouldn’t give up hope in the Russian people. It is the people who could bring about change and we need to be more forthright in supporting their interests.

Moshes – the only Russian on the panel – takes the stage. He notes he is just a researcher but he feels an academic response is needed. This is conceptual as there is no real evidence beyond technological connectivity that Russia is modernising at all. The current Russian leadership interprets modernisation in technological terms. It doesn’t involve society. It’s merely in terms of infrastructure. But if the government wanted the contribution of the people – hypothetically – then it faces 3 main difficulties. First problem is the existing political power structure. Bureaucrats suffer from the fear of failure for positive action for reform. Second problem is the growth of paternalistic feelings and expectations of the society. Many people expect that the state will be there forever. Would be difficult for political figures to maintain support from the people who want welfare state to remain. Third problem is a brain drain. Russia has lost some of its most dissatisfied (and usually educated) citizens to immigration. So the picture as Mosher sees it is worrying. Of course it would be good to have modernisation; it would probably bring Russia close to the West, just as it did for China. The West of course should be interested to encourage Russia’s modernisation. Mosher says he doesn’t believe that the West is doing as much as it can to support Russian modernisation. As a whole, Russia may be less of a military threat and can enter in to economic relationships based on sale of Russian energy and purchase of Western goods. So perhaps the West is not in a hurry for Russia to change.

Questions now being posed from the floor. One question is on how neighbouring nations can engage with the modernisation process. Sherr notes that Ukraine is in a unique position. If Ukraine were determined to make another model of political governance succeed, then there may an example which Russia can pursue. But this places a huge burden on the Ukraine.

Another question is the process through which change can occur – revolution or evolution. Sherr notes that he does not believe that change will occur until there is some extreme external shock. Already Orange revolution and economic recession did not resolve in change. The system will find a way to return to business as usual. Teltschik says that there can be external conditions on economic relations that can produce change. EU and NATO in particular could pursue this route.

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JJ’s conclusion – This has been a great session – congrats to all panellists and to the Riga Conference. I’ll close this liveblog down now and you’ll need to watch the livestream for the afternoon session. A reminder that I will be on stage here at 5pm Latvian time (3pm London time, midnight east coast Australian time).